with the company. i have taken and will continue to take steps to make sure something like this never happens again. the valukas report contains detailed recommendations for how the legal staff can improve. and serve an even greater role in meeting g.m.'s commitment to safety. i'm assuring the implementation of each and every recommendation. and i have made and will continue to make other changes to help improve. i have directed that before any settlement or trial of a case involving a fatality or serious bodily injury that the case be brought to me for my personal review with a focus on open engineering issues. i've reorganized the legal staff to foster sharing of information and the identification of emerging trends. including vathe a senior attorney to be the chief legal advisor to jeff hoyer, vice president of global safety, with a direct reporting line to me and a dotted reporting line

to mark royce, executive vice president of global product development. i've supplemented existing legal sources within -- with attorneys from two outside law firms to make sure that we have the proper level of engagement. i've also appointed a well respected outside law firm to conduct a zero-based review of our litigation practices. i've met with the entire u.s. legal staff to discuss the valukas report's findings and to set high expectations for the staff going forward. these changes and others will result in greater transparency and information flow on issues of safety within the legal taff, as well as the company generally. and i'm committed to make sure that i and g.m. senior management team have a full line of sight into all safety-related matters. g.m.'s legal staff is comprised of hard-working and dedicated professionals of the highest integrity. they strive daily to help

global g.m. achieve its business objectives in a lawful and ethical manner. they have expressed sincere and deep disappointment and regret because of the actions and inactions of some individuals within the company including some on the legal staff who failed the company and our customers. the g.m. legal staff is dedicated to helping g.m. become the leader in automotive safety. we now have to correct our mistakes. and we are. but this is only the beginning. all of us at g.m. are committing to seth a new industry standard for safety, quality, and excellence. we must do better. we will do better. i am personally committed to this. thank you. >> thank you, ms. barra. >> chairman mccaskill, ranking member heller, and members of the committee, when i first appeared before you, we were in the early stages of the ignition switch recall.

i promised you we would get answers. and be fully transparent in what we've learned. i also said i would not wait to make changes. today i worked to fix the mistakes that led to the ignition switch recall are well under way. as a result, we are building a stronger company that places customers and their safety at the center of every aspect of our business. in a town hall meeting before thousands of general motors employees and several thousand more around the world jay satellite we accepted responsibility for what went wrong. i told the men and women of g.m. that our actions would be guided by two clear principles -- first, we would do everything in our power to make sure this never happens again. and we will do right for those who were hurt. and it is on this point i want to begin. i want to recognize the families who lost loved ones and those who suffered physical

injury because of these mistakes. to each of them i extend my and our g.m. employees sympathy. we will not forget them. nor the special responsibility we have to them. we are committed to treating each of them with compassion, decency, and fairness. that is why ken feinberg will independently administer a compensation program. mr. feinberg has talked about his compensation program. it is, however, worth noting that he has complete and sole discretion over all compensation awards to eligible victims. and this is very important. there is no cap on this program. as i stated earlier, we want to do all that we can to make sure this does not happen again. we created this compensation program as an exceptional response to a unique set of mistakes that were made over an extended period of time. the valukas report was only a start and many changes were in motion even before we received

the findings of of the report. i will use the reportaries findings and recommendations to attack and remove the information silos wherever we find them and to create an organization that is accountable and focused on customers. i'm committed to acting on all of the recommendations contained in the report. actions we have already taken include elevating safety decision making to the highest levels of the company. i've created a new position, vice president of global safety. he has full access to me. we removed 15 employees from the company. some for misconduct, and incompetence. others because they didn't take responsibility or act with a sense of urgency. we've instituted a speak up for safety program to encourage and recognize employees that bring issues, potential safety issues forward quickly. and we've added over 35 investigators to identify and addressed issues much more quickly when they relate to safety. we've aligned the legal staff

to help assure greater transparency and information sharing among the staff and across all business units around the globe. and most importantly, we created the product integrity organization. which brings a complete systems engineering approach to the safety of our vehicles. overall, we are dramatically enhancing our approach to saflte. you can see it in the aggressive stance we are taking on recalls with the redoubling of our efforts. we are bringing greater rigor, discipline, and urgency to our analysis and decision making. we are mining every source of data available to us from the factory floor, warranty information, customer calls, legal claims, and social media. we are not waiting to see if a trend develops or updating spreadsheets. we want our customers to know when we identify an issue that could possibly affect their safety, we will act quickly. yes, we have recalled a large volume of past models and a

result of our exhaustive review coming out you have also conducted 12 recalls of less than 1000 vehicles in four of less than 100 this year. this demonstrates how quickly we are reacting when we see a potential issue. i also know that the recent efforts and the current frequency of recalls have garnered considerable attention. lacing the highest value on or customer safety is what our employees want to be known for. we want to stand as a company that is setting the new industry standard for safety. our employees will not forget what led to the ignition switch recall but they also don't want to be defined by it. after my town hall, i could hear it in your voices, i could read it in their messages. they're all in to make this a better company. i believe in them and together we have been working hard over the last few months to address the underlying issues that

caused this problem in the first place. been at town hall, i have inundated with calls and e-mails him employees telling me they are more motivated than ever to make gm the best possible company for our customers. this is our mission and it won't happen overnight, but i can tell you we are holding each other accountable to do exactly that. .e are 100% committed i appreciate the opportunity to be here today and i welcome your questions. >> mr. o'neill, thank you for being here. >> thank you. chairman mccaskill, the ranking member and members of the subcommittee, thank you for inviting me here today to testify. i am the chief executive officer and president of delphi automotive. first and foremost, on behalf of myphi, i want to express profound sympathies to the victims and their families. people were hurt and lives were

lost. we must work together to avoid tragedies of this nature going forward. the subcommittee's work is an important part of that effort. members of the subcommittee, i appreciate the opportunity to address the important issues that you're considering. we fully support your efforts. i would like to discuss three main points. first, delphi's efforts to provide replacement parts and support general motors in connection with the recall. with theur cooperation subcommittee and other governmental bodies as well as gm am in third the review and reinforcement of delphi's safety policies and procedures. my first point, i would like to provide some information pertaining to delphi postured a reduction of replacement parts for general motors. the vehicles that were recalled

were not in production several years ago. as a result it has been a monument task to build over 2 million switches in a matter of months. we have installed three new production lines and trained additional workers. at this time we have shipped over one million new switches and we're on track to deliver more than 2 million switches by the end of august. we have done all this so that consumers can have their vehicles repaired by general motors as quickly as possible. a second point is that delphi fully supports the subcommittee's efforts as well as those of the house energy and commerce committee and other governmental bodies. our support has included conducting an exhaustive review and providing relevant documents and meeting multiple times with the subcommittee and federal agencies. in addition, we have cooperated with general motors in the recall and its investigation and

our cooperation includes entering into a reciprocal document sharing agreement and we have provided relevant documents and of course with that agreement. , we have conducted a thorough review of our current policies and procedures related to product safety which we believe are robust and which we are continuously working to improve. for example, and at my direction, we have reinforced our global engineering team on the importance of raising safety concerns so that they can be handled roughly. we have strengthened our procedures to ensure that safety concerns are communicated across all relevant functions within our company, and that includes reports to our senior management and to our customers. we are committed to acting upon all such concerns in a timely manner. the industry has created a new standard to focus on how these complex safety systems work

together instead of looking at safety on a part by part basis. we support this new standard and given what we have learned from these tragedies, the new standard should be very helpful going forward. a written statement provides additional details and i will be pleased to address any questions you may have. again, thank you for this opportunity to testify today. -- mr.k you, mr. of deal o'neill. >> chairman mccaskill, ranking member heller and members of the committee, thank you for having me here today to testify about the cobalt ignition issues. , generalof this year motors board asked me to determine why it took so long to recall the cobalt and other vehicles that contained the faulty ignition switch. my explicit mandate from the board was to provide an unvarnished report on how and

why this occurred, pursue the facts wherever they took us, and to put those facts into a report. that is the report which we submitted to the board. general motors board also directed me to make recommendations drawn from the facts to help ensure that this did not occur again. unfettered was given access to general motors witnesses and to their documents . we interviewed more than 230 witnesses and conducted over 350 total interviews. some of those interviews lasted over two days. the collect -- we collected more than 41 million documents, all in an effort to find out why the cobalt recall was delayed for so many years. in that research in terms of the investigation, we looked at every ceo, we looked at all of the engineers, we used search so no one was exempt from

that review. i will not summarize the report, you have it. i will however note that among the issues we specifically examine are the issues that are the topic of this hearing. accountability and corporate culture. we ask questions of dozens of witnesses from top executives to line engineers about these topics. we examine the decision-making process is that related to the ignition switch issues and whether there were broad cultural issues that may have contributed to the delayed recall. the story of the cobalt is one of a series of individual and organizational failures that led to devastating consequences. tookghout the decade it till motors to recall the cobalt, there was a lack of accountability, a lack of urgency, and a failure of company personnel charged with ensuring the safety of the company's vehicles to understand how general motors vehicles were manufactured.

in our report reviewed these failures including cultural issues and that may have contributed to this problem. board'sal motors request, we provided recommendations to help ensure that this problem would never occur again. i'm happy to take your questions. thank you. >> i want to say to the committee, many members of the committee have worked very hard in preparation for this hearing. so we can try to get two rounds of questions in before we have to leave for boats. mr. milliken, i want to spend my time on my first row with you. i want to make sure everybody understands what punitive damages are. four lawyers, that is a blinking red light. and you mr. belugas

will confirm that punitive damages in our system are designed to punish corporations. conduct that is outrageous and egregious. it is a method by which justice can be done by punishing bad behavior. atattern was emerging general motors for almost a decade about these cars. there was some confusion on the part of at least one engineer. 2010, yourber of lawyers -- this was not the plaintiff's lawyer that was out there making a frivolous lawsuit. saidlawyers that you hired you are possibly subjective -- subject to punitive damages over the way you have handled this problem in this automobile.

that was in october of 2010. i believe you were general counsel been, correct? , in july 2011, your that there is a potential for punitive damages because of this factual scenario. are also general counsel then, correct question mark at that point in time, lucy clark authority in july of 2011 was general counsel for north america, correct? i believe she began in that position in march of 2011. thinking it was 2012, but i could be wrong. 2012, anotherl of one of your outside lawyers that youur department were subject to punitive damages.

which could be millions of dollars for corporation the size of general motors. factclark authority was in general counsel for north america. in april 2013, almost the same time you had the bombshell dropped on you in the definition -- in that deposition , showing the switches had been switched out, the part had been change, once again you are warned about punitive damages. . >> as a company, that is correct. >> see you have a legal obligation -- legal obligation to report it to the securities and exchange commission. did you ever do that about this issue? andhe issue of this product the problems surrounding it, have you ever reported to the sec?

.ot your legal department your legal department knew it. >> am talking about from the time i knew forward and excluding that, before that, no week have not. subsequent to that we may have made a filing with the sec about the ignition switch recall, that is correct every >> what about the legal obligation to inform the board of directors. or they were that your lagers retailing you this car was going to cause you to to damages? >> they were not given >> what about financial reserves? were you entering in the books of financial reserves necessary to cover this liability which is your obligation as general counsel? >> we were not entering any reserves to color -- cover punitive damages, no we were not. how you andt get lucy clark authority still have your jobs. can you explain that to me? >> i think you have done a lot

of good work century to go over. i think you handled this with courage and conviction. i cannot for the life of me -- this is either gross negligence or gross incompetence on the part of a lawyer, the notion that he can say i didn't know. craig senator mccaskill, i respectfully disagree. as you know, i have made a promise to fix what happened in the company to make sure that we are dedicated to safety, dedicated to excellence. we are well on our way and we have made significant change to do that -- to do that, i need the right team. might milliken is a man of incredibly high integrity who has tremendous global experience as it relates to the legal profession. he is the person i need on this team. he had a system in place him unfortunately in this instance it wasn't brought to his attention from a frankly by people who brought many other issues forward. he is a man of high integrity. >> was there a system in place that says your lawyer is telling you your subject to punitive

?amages how is that not incompetent? she says we have our lawyer telling us for different times within a couple of years on something you had not even talked about recalling, punitive damages. how do you have a system in place it doesn't look out for that? >> we had very senior lawyers who had this information did not bring it forward who are no longer with the company. detailsnt through the of the lucas report very carefully, and i would say when in doubt we reached further to take action, there are many lawyers that are no longer with the company to >> i think there has been a blind spot here. my time is up. think the failure of this legal department is stunning and the notion -- you look around government, when something like shinsekiens, secretary

did know about those problems and canceling. nobody told him. he is gone. >> madam chair, thank you. being here today and taking the tough questions. of complete the circle here. i would like to ask you just a couple of questions regarding your products. time, soave a lot of the short of the answers, the better. the complaint as they started piling up in 2000 on your product, did delphi conduct any internal investigation to determine whether your part was at fault? aware of thet deathson in terms of ,ntil february of this year 2014. quick so you are saying

obviously not. he didn't know until february of this year. was there any reason to believe that anyone in your company may ?ave known >> in the exhaustive review we have done in our documents in talking with individuals, it was clear to the delphi team in working with the general motors team when this particular situation, we were concerned about customer satisfaction and what it cost and quality issues. >> is there possibility that any individual in your company simply did not take it to the top? very hard,d very, and there is no evidence of that because it's quite clear the mindset was based on information that they were given. they were working on quality issues, not safety issues. >> did anyone ever raise concerns about keeping it the

same with this part? quick standard protocol in our industry is that the car manufacturer may determine the part number and they control that part number. so if that part number is ever to change, the car manufacturer would dictate the change and we would automatically up rate it. next do you feel that delphi shoulders any responsibility here? me explain some important information and i think it would lead to that discussion. a productroblem -- that we work with general motors to develop and that was the switch. that's which started with a certain set of requirements. often in development working with the customer, general motors in this case, those requirements can become more stringent.

they can become less or they can stay the same. in this particular case -- i it was athe report very european-style switch. bywas ultimately approved general motors and that part met the requirements that was dictated. otherart then met with parts and became part of a subsystem called the ignition assembly. >> i hate to interrupt you but i don't have a lot of time. product met the requirements of the customer. >> so no responsibility. >> no. >> mr. belugas, understanding was a sharing agreement with delphi. was it as forthcoming as you would have liked it to have been? do you think the limited

information you receive from delphi prevented you from providing a complete report? >> no, i believe at this point having had the chance to put the extra six-month -- six weeks or month by way of what we had in materials, i think the report is complete. comfortable with the delphi aspect of it that we have that information. >> is there anything we don't know that is relevant? >> i committed and promised to an earlier committee that if we found something i would go to the board of directors. if interface anything factually so we learned that would alter it in a significant way, we would supplement the report and i would make that commitment to this committee. right now believe that everything we could know about this issue we would put in that report or a supplemental letter. next do you feel that delphi shoulders any responsibility? deaths?13

>> i can tell you this. approved thes switch knowing that it was below pork values and that was an approval that was given to delphi, and delphi manufactured the switch in accordance with that approval. that delphilieve shoulders any responsibility for the 13 deaths? iswe are the company that responsible to integrate the parts into the vehicle so it is our responsibility. >> thank you very much. >> thank you very much, all of you. i spoke earlier about growing up in minnesota [indiscernible] this story is not just tragic because we have constituents and because the facts are tragic. it also turns out to be an important art of mr. valu

kas'report. the wisconsin state trooper conducted an investigation himself after the crash and clearly made the link between the defect is -- defective ignition switch and the failure of the airbag to deploy. he cracked the code that seem to have evaded gm engineers and lawyers for years. he wrote in his report that was in the legal files as of february 2007. he wrote "the two front seat airbags did not deploy. it appears the ignition switch been turned to accessory prior to the collision with the tree." did you interview people about this report and did you figure out why no engineers had read it at gm? >> what happened with this report was that the report, and i believe correctly analyze the situation back as far as 2007,

was collected by gm as part of into what iss put called a rumor file and at some point it was accessed by a paralegal who then sent to -- at no point did we have it frantically reviewed by outside experts. at no point was it access of 2014then and march when the investigation was undertaken. so during that time it was in those files, that rumor file, and know when i gm look at it other than back in 2007 when a senate. it seems to me it is somewhat official and there is also an indiana university study, they were commissioned to look at the crash as well. was that also in the rumor file? next they actually did not even have that. even though is publicly available, it gm did not gather

that public information. that was not something they had until 2012 when it outside expert made available as part of their report. be that you guys , you'reor seven years starting to see all these airbag non-deployment cases that nobody saw this report and looked at it ? you are seeing an example of what the report identified. file ismation flow, the not one that was searchable by the normal terms that people would use when they were looking for documents. it's my understanding from the report, and we're doing what we can to make sure we do have this honor going forward basis. this is a tragedy that cannot happen again and i'm dedicated to making sure we make the changes we need to ensure that. panel, i dofirst

appreciate you have come forward out front and set up this compensation fund. knowsaid were not going to if justice is done until we see with the outcomes are and i appreciate the work that has been done on the recall as the owner of her he gm car. one of the things mr. lucas wrote in this report, he said although everyone had responsibility to fix the problem, nobody took responsibility. he said a top executive described it as the gm not, when everyone nods in agreement to a proposed plan of action. steps have you taken to implement, to get rid of what we call the gm nod, and how do you ensure we move from confusedure of responsibility to defined responsibility? >> in my career at general motors, and never accepted the gm not and frankly i have called people out on it.

it is not appropriate. we make very complex products and it's important that all voices are heard. the way you change culture is by demonstrating the behavior, making sure people understand what your expectations are, and calling them out when they don't. i've been demonstrating that, i direct leadership team is 100% committed to that. i have talked openly about it. employeesk to all globally on june 5, after i read the report, which i found deeply troubling, i told them that and i told them that behavior was unacceptable, we were not going to tolerate it. the true change will be by behaviors. i am intent on making sure the right behaviors continue going forward. q. >> we have a custom in this committee that when that chairman of the ranking member shows up they can cut in line. i'm going to abide by that appropriate custom and recognize

the senator for his questioning. cuts that makes you really popular here, madam chairman. i appreciate it and i thank you for holding this hearing and staying on these issues. it's important that we examine the developments following this recall issue. i know you have been working very hard on this and we all share the desire to get the answers and ensure this does not happen again. minted it failed to report the safety-related defect in a timely manner and the report is called gm's delay in addressing the ignition switch defect. as we all know these delays cost lives and i know i express my deepest sympathies to those who were injured or lost loved ones in car accidents involving gm vehicles that have now been recalled. , i welcomen i have

the very public steps you have taken thus far to address the needed changes within gm, some of which you have discussed in your written testimony. i'm also reminded of statements that your immediate predecessor also discussed in his efforts to create a culture of accountability at gm following the company's bankruptcy in federal bailout. somealukas uncovered troubling findings and my in your view isn't a sign that a cultural change has yet to take hold at gm? >> culture change happens over a long time. i would say mr. ackerson did extensive work to make sure he drove the right behavior but i think we are on a continuum of making that cultural change.

the very open and transparent way we are dealing with the issue and sharing it with employees, they want to change. they want to make sure we have the right systems and processes in place. i would say mr. ackerson started on that journey and we are continuing and accelerating it. >> how do you plan to measure that change? >> on a couple of fronts, one on the very real part from a safety perspective, we've already broken down the silos and we are mining data is in using some of the latest analytic egg links to make sure information comes from across the company. we have engaged employees and they are participating in our speak up for safety program. of choicerkplace survey every 18 months and we have seen improvements in that. that will be another key objective way to make sure we are driving the right openness. i get hundreds of e-mails from our employees on a weekly and monthly basis and they are

engaged, and that to me is the best sign. is actions, not words, that will change behaviors. >> what role do you think the board of directors has in changing the culture? question role of the board is to clearly state their expectations of how they company should operate. as ceo it's my job to make sure we are living up to their expectations. valukas is based on the report. the problems were not limited to the switch as specified. from 2001 mention quite a bit of frustration on the part of gm in dealing with these delphi switches due to electrical failures and delphi's inability to deliver parts for testing purposes. taken together, this evidence would seem to indicate a problem

for greater than we were initially led to believe. now with that ignition switch, these issues have come to light, have you gone back and reviewed these concerns and determined what delphi will do in the future? >> we did go back and look extensively at all the documentation, and we found nothing that was abnormal in terms of product development. and ultimately how the problems were addressed that you sometimes run into as you move from development to production, etc.. as i said, our product has met the requirements. it injured and ignition assembly products,t had other i'm assuming the other products

met their requirements, but when they come together they form a saidm and as mrs. bauer earlier, it's someone else's job to make sure that those products work in total harmony when they come together. back ande gone understood our role in that. ofhink the new legislation how safety systems interact from , and we perspective will work diligently with general motors over this issue. >> in 2006 gm authorized a changed in the ignition switch but did not change the part number. as a supplier, is it a common practice for delphi to allow him a new factor to change apart and not change the part number? about 120,000had engineering changes and only

about 40% of those actually had a part number change, so it's quite normal not to change the part number. >> do you allow the manufacturer to do the same thing? >> yes. >> my time has expired. >> thank you very much. >> thank you, madam chairman. report, when your did the legal team know about this problem? back tonk you could go their investigators, it would have been in the range of 2007, it was called to their attention . there began an inquiry about who wasinvestigator assigned to the gm legal team. >> when did they know about the ignition switch problem?

period ofloped over a time and the first time i can recall the matter was being called to their attention in some way, it may have been as early as 2009-2010. >> mr. milliken, how long have you been the chief counsel? quick since the middle of 2009. forve been with the company 37 years. >> that you were in the legal side of the company before that. >> yes sir. >> when did you first find out about these two problems? >> i first found out about the ignition switch recall situation the first week of february of this year. >> how is that possible that nobody would have told you before the first week of february of this year? >> my information is based valukas report. there's a long time when there was not a connection made between the ignition switch

problem and the non-appointment of airbags. in terms of looking at the results of the report, i think it all came together for the lawyers at the time of the milton deposition in 2013 and from that point on there was enough information in the legal staff for people to have taken action and to have caused the engineering organization to take action. tragic,.'t, that was >> give me those dates again from the time you think that enough information to take action until the time you found on with five i'm basing it the definition in april of 2013. >> and you didn't know until february of 2014. i'm going to ask mr. valukas this as well, but with this kind of problem be allowed to happen again? what have you done to prevent those same set of circumstances from happening again? >> before any case can be

, if it or taken to trial involves a fatality or serious bodily injury it has to come to me regardless of the amount of the settlement postal and i want it brought to me with full explanation of the case, with a focus on any open engineering issues, so that i have an opportunity to cause open engineering issues to be addressed if they are not being properly addressed. >> is there anyway to trigger this before you have a serious bodily injury or fidelity or lost sock -- lawsuit? it would bring to my attention cases on a more regular basis than were brought to my attention before. >> is it your view that the changes that have been made would prevent what happened from ever happening again? >> ugly based on what i noticed taking place that the answer is yes. one of the things that is happened here is the flow of

information which you are able to identify quickly enough so that the engineering department was not acting on it and going back to comments that have been made earlier, the legal department of be in a position to force that to take place. >> have employees been let go because of this? mr. milliken, have employees been let go because of this? are anythey have to >> of them challenging their dismissal? >> they are not. >> you are selling lots of cars. also recalling lots of cars. i think 25 million is the number in the last 12 months. why would there still be so many recalls? i'm not suggesting that is necessarily a bad ink, but why's that number so high? >> will we learn what happened with the ignition switch recall, we went back and redoubled our efforts. places.d at a number of

we tackled all of those. we went back extensively and looked at information we had to see if we could more quickly put together any trends. as it relates to every safety giorgio hadr. do responsibility for, we looked and assessed every single one of those. in some cases there's not even any field information to suggest there is an issue, but as we get our systems engineering analysis, if we saw that by adding an insert into a key we could make the system more robust, we did that. we are intent on being a company known for safety. this was an important step and we will continue >> we are joined on the phone by david jefferson. what is the status on the house

senate negotiations? >> the house has several issues they are pouring through. documents, trying to come up with proposals for new legislation energy and commerce committee. he said he expects to introduce new reform legislation early next year. they have both introduced separate measures to give the government more power to more quickly get unsafe vehicles off the road and impose much tougher fines. those bills are likely not to come up until early next year and would most likely be rolled into a highway bill, given that the current one will expire next may. and --headline from the detroit news is that mary barra is sending letters to 1.9 million car owners in the

recall. what is in those letters? is working overtime to get people to get the z eckels fixed. worldwide they recalled 2.6 million. anthose they fixed about hundred thousand. in this case it is about ensuring that the people who ordered the parts to their dealer get those parts fixed. some of them have not honored to follow through to get those parts. remember, when this issue first came to light in february and march, they did not have any parts. gm was paying for thousands of these cars. and they are still building parts in mass -- in mexico , so it will not complete the tot